A glossary for health insurance open enrollment

Open enrollment season for employer-sponsored health benefits can come loaded with confusing terms. Here is a glossary of common words or phrases.

Coinsurance: This is the percentage a patient pays for a medical service generally after a plan deductible is met, and it can vary by plan. Your insurer may pay 80 percent of the cost of your X-ray, and you pay the remaining 20 percent.

These plans often give the customer a lower premium, but they must pay a high deductible before coverage starts. For plans with health savings accounts, that deductible must be at least $1,200 for individuals and $2,400 for family coverage next year.

The idea behind them is to give customers an incentive to shop judiciously for health care.

Co-payment: or co-pay, the flat dollar amount a patient has to contribute toward the cost of a covered medical service. An example would be the $20 charge at the doctor's office. These amounts are spelled out in insurance plans and don't vary based on charges the way coinsurance does.

Deductible: the annual amount a patient pays out of pocket for care before insurance coverage starts. This varies widely by plan. Insurance with high deductibles, which generally means $1,200 or more, often comes with lower premiums.

Flexible spending account (FSA): This lets employees set aside pre-tax wages for certain medical expenses not covered by insurance. The money must be used in the year it is set aside or it is forfeited.

Health reimbursement arrangement (HRA): This is an employer contribution to certain medical expenses before deductible and coinsurance amounts are applied. These help the employee pay the higher out-of-pocket costs that come with a consumer-directed health plan.

The money in an HRA belongs to the employer. That means the employer keeps it when an employee leaves a plan or the company.

Health savings account (HSA): Like the HRA, these also help people in consumer-directed health plans pay out-of-pocket medical expenses. Unlike HRAs, employees or customers own the HSA. They can deposit pre-tax money in the account, and some employers also contribute to them.

Any unused balance grows, and the customer keeps the account when leaving a job.

Next year, customers will be able to set aside as much as $3,050 in an HSA for individual coverage and $6,150 for family plans. Account holders over age 55 can also make increased payments until they reach Medicare eligibility (usually at age 65).

High-deductible health plan: These can come with lower premiums than traditional coverage, but the patient pays more out of pocket before coverage starts. High deductibles generally top $1,200. If they are at least $1,200 for an individual or $2,400 for a family, the plan can be paired with a health savings account.

Consumer-directed health plans involve high-deductible insurance.

Out-of-pocket expense: the amount an employee or customer must pay toward the cost of care. This includes deductibles, co-payments or coinsurance.

Premium: This is the monthly bill to carry an insurance policy. Employers pick up 84 percent of the premium for single coverage, on average, and 74 percent for family plans.

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Sources: WellPoint Inc., Kaiser Family Foundation, the Web site
http://www.planforyourhealth.com
, which was created by the managed care company Aetna Inc. and the Financial Planning Association.